He'll be replaced by co-founder Jerry Yang. Disappointing growth and the belief that Yahoo lacked a clear direction obviously took their toll. Not helping matters was Semel's very high compensation (over $70 million last year). Semel, who is 64, will stay on as nonexecutive chairman. Here's the Bloomberg story and here's what he said in a press release.

The Board and I have long talked about the importance of ensuring a smooth succession in Yahoo!'s senior leadership -- and more recently, about the need for a leadership team committed to carrying Yahoo! through its multi-year transformation. As we discussed my future goals and plans, I was clear in telling the Board of my desire to take a step back sooner rather than later. I believe Jerry and Sue, with their superb talents and intense dedication to Yahoo! and its people, are the perfect combination to carry us forward. This is the time for new executive leadership, with different skills and strengths, to step in and drive the company to realize its full potential -- it is the right thing to do, and the right time is now."